Trade and Rumors of Trade: Are We Being Scammed?

First thing out of the rack this morning I popped open the futures market and our Aggregate Index Daily view of things, including our “red line” indicator. Here’s what it looked like:

Based on what I saw, the “rumors of trade” had hyped the market to the point where two important things MIGHT happen.

First, if the early futures levels can be held into the close, and a similar big move engineered for tomorrow, the monthly closing of out index MIGHT turn positive. Last day of July closed at 25,319.27 so even with the early futures pricing the Aggregate at 24,716.43 (based on the Dow futures, among others, being +261 at the time I rang things) that would still leave a 600-point :”wall” ahead. Not likely but possible.

On the other hand, IF the trade rumor is substantiated with a second source, or another official, THEN we might see a pop not of 250’ish points today, but something like 500. SHOULD something like that happen, then all it would take would be an announcement of a meeting and the words “breakthrough” or “likely” to be tossed around. If so, we just might make it.

All Mr. Gao (allegedly) said, essentially, was that China could resolve trade differences with a “calm attitude” which sounds as much like China feeding democrat presidential hopefuls “proof” against Trump, as any substantive change of Chinese position. People hear what they want to hear, don’t they?

Moreover, indicators that might move a lot on a substantive breakthrough – like gold and silver – were mixed with Kitco quoting gold down $3.30 earlier while silver was up 11-cents.

More to the point, if China was really changing anything substantive on Trade, we would expect it to warrant mention either on the Ministry or Commerce site, or at least make the front page of Xinhua.

The only substantive trade movement was in China’s official press was this:

“BEIJING, Aug. 28 (Xinhua) — China on Wednesday announced it will soon start accepting applications for exemption from its second-round of additional tariffs on U.S. imports..”

That was in the markets yesterday.

Without a major player making an announcement, we sense the “herd” might be a little too anxious for a rally. It’s the way herds operate sometimes, ahead of major holidays. Like this weekend’s.

We have to critically ask “Is someone working the herd?” Novel outlines appear. Paul Erdman would be proud.

Mutually Assured (Financial) Destruction

In case you hadn’t figured it out yet, the US and China both have everything to lose if a trade deal isn’t nailed before year-end.

Donald Trump stands to lose his re-election bid.

China’s president Xi stands to lose face and lead his country into a major slow-down and that could cost him “leader-for-life” if it’s not sold as in China’s strategic interests.

China stands to lose a food source.

The U.S. dollar, for now a safe-haven as Europe’s in trouble, might begin to wither…

China, looking for a “news distraction” might become more adventuresome.

And it’s a cinch that North Korea will track to be more of a PITA.

The real problem for every government (on this fox-uniformed planet) is properly answering the question we’ve been noodling recently on our Peoplenomics subscriber side: What’s worth buying, anymore?

The world is awash in paper. Goods, too.

We need China (and others) to keep buying our bonds (because we can’t keep buying from ourselves in circular economics few comprehend). China needs to keep exporting because their middle class isn’t yet big enough to consume all their own output and retain enough pent-up demand to drive internal growth and kick-off the virtuous cycle.

Thus, we can see how the global issue of “consumer super-saturation” begins to loom large. The virtuous cycle only works if you have planetary resources to strip.

How did we squander that? Key economic context here:

Globalists made a major decision in the 1960’s when eyeing the future of the Second and Third Worlds. The problem back then was “If the First World feeds the Third World,they will breed and eventually we (the whole planet) go into over-consumption. Until all the resources are gone.

Which is where we’re headed. In slow-enough motion though, so it’s not apparent to the phone-faces (derr public).

The economic terror-ahead (and one point of my next book “The Hundred Year Toaster” which has been rolled out in chapters for Peoplenomics subscribers) is this:

The World has “Ridden into a Box Canyon.”

The “Box Canyon” looks like this: One wall (let’s say on the right) is economic. If there’s a global decline in consumption, that wall comes crashing down on the inhabitants of “world in box canyon” and “kills everyone in the canyon.” Virtuous Cycle goes Vicious Globally.

Think previous Depressions were bad? Hahaha! Global Depression is simply unfathomable. Water and infrastructure failure alone will kill a billion.

On the other side, the left wall, is Resource Depletion and Environmental collapse. They’re two sides of the same coin. This left wall is only holding momentarily because of fracking technology and more lines of code. OK, plus endless hype about 5G and lambdas on the phone. Eventually, the left wall will collapse as we “eat the agar” and run out of resources on Petri Dish Earth.

China’s building their analogs to Great Lakes Ore Freighters that once fed Detroit. With American auto leadership dispersed globally, ore freighter futures aren’t much of a market.

One More Problem

Structurally, Americans already have too damn much crap.

My late grandmother spent her closing years in a small studio apartment, reading “The Daily Word: as her eyes allowed. Entertainment was Bingo games around town. Coffee on a small gas stove and pumpernickel with a smear of liverwurst for lunch. A sweet pickle on special occasions.

Two generations ago. Not that far back.

Fast-forward to Present. What does retirement look like?

Now in our 70’s Elaine and I have (going from memory) already outlived the grandmother. Instead of walking to Bingo, we have a collectable old Lexus. Not quite a studio, we ramble through 2,450 square feet under air. 10 computers, and as of this morning 473-books on our Kindles. Tech has run wild – feeding our excess consumption.

Here’s the problem ahead so you see it: The downside is up-scaling people is driving The World deeper into the aforementioned “Box Canyon.”

Three wi-fi networks feed our life. And that speaks volumes: About how “the new consumption is digital” – but it doesn’t eliminate the resource depletion problem. Or answer “What’s really worth buying?” It just flips it into a politicized on-line head-trip. Actual physical craftsmanship must disappear into “virtual crafting” because the planet is no longer Big Enough.

Seriously: Earth is Not Enough! Elaine and I figure our slices in the East Texas outback to be 14-1/2 acres each. Let’s round it 14. If everyone in the world were so blessed, Earth would require 106.26-billion acres of land mass to give an equal amount to the other 7.59 billion other folks in the Box Canyon with us. In square miles? 166-million square miles ought to do it.

Box Canyon Reality: The entire world has a land mass of only 57.506-million square miles. And that’s before discounting, as not-too-useful, areas like the Negev, Sahara, Antarctica and other huge desert areas. Death Valley? Well, people do live there, but at what cost? See, it takes services and that narrows down the available land by what? Half? OK, less if we write off mountain peaks and ranges like the Himalayas.

Don’t mean to get off on a tirade tangent this morning, but the world’s in an Historically Large Global Bubble that has never existed before – and likely never will again. The resources won’t recover for uncountable centuries to make another run at it.

One of these morning’s Ahab Ure will shout “Thar she blows!” and the walls of the Box Canyon will both be seen to be crashing down. Rather than admit to disaster, back-pedal, and re-think? There’s only one way remaining to “thin the herd” and maintain power for the Elites: Global War which will be the existential outcome for all.

Not pretty thoughts, to be sure. Maybe I’d better stick with the China Trade Scam the novel outline I was working on earlier: Where a cabal of government, media, and major hedge funds decide to plant rumors to drive markets. Scamming the herd, funneing more money to the Rich so they can…what? Buy some land? Sheesh.

We will now headline today’s rope-the-dopes.

Today as Two Screen Shots:

Normally about here, I’d pepper some headlines around, but not in the mood for that. Morning’s like this sometimes its best to look out to the horizon…feels like a useful thing to do.

16 Comments

Humanity has not successfully banned natural laws. We are still subject to physically living here. Yes we are in a box canyon of our own making. The Earth will roll on using natural laws which will bite us collectively in the butt. Everything will even out, numbers of humans will drastically drop, and life will go on.

Nobody lives forever in these meat suits. Enjoy today, hope for the best, prep for the worst and get on with things.

Ray on August 30, 2019 at 01:29

BTW, it’s another August with temps that’re 20+ degrees below normal. That’s 8 out of the last 9 years. I shouldn’t complain about bright, sunshiny days with temps in the mid 70s and humidity in the mid 40s, but I find myself contemplating a move to rural Edmonton, where it’s warm. I’m actually starting to miss those 103 degree days. Damn’ global warming…

Ray on August 30, 2019 at 00:58

Not to sound like a Muskovite, but there IS another way… Up!

In the past 50 years we’ve taken the power of a building full of IBM 370/60 mainframes and condensed it into a credit card sized device. If we (meaning the human race, not us, in particular) live long enough without blowing ourselves to bits, I see no reason why we shouldn’t master the ability to warp the space/time continuum and make Asimov’s and Clarke’s Universe, science fact.

However, we’ll never do it creating generations of whiny-assed, virtue-signaling, narcissistic brats of 47 different genders. The Regressive (they call themselves “progressives,” but that’s newspeak, and they’re not) plan is to foment chaos until the U.S. 86’s its Constitution and ceases to stand in the way of one-world communism, then dispose of the chaotic elements and make good little worker ants of any who remain.

Space exploration and exploitation to any extent will never occur, if only governments do it. Elon Musk is nuttier than a fruitcake, but he’s also a visionary, and he’s got the right idea, but insufficient data. Our grandchildren can find the data, but not if they’re in a quandary about which restroom to use…

Ray on August 29, 2019 at 23:13

The problem with a pandemic is: Bugs iz notoriously catholic in their tastes…

There is no way to know for certain, that an antidote (whether vaccine or cure) for a bioagent will actually work, and no guarantee that said bioagent won’t mutate more quickly in “free air” than antidotes can be developed. Only a person or organization willing to sacrifice themselves would create a test tube pandemic because once loosed, that genie could NEVER be recorked…

Looking out of the box on August 29, 2019 at 13:59

“There’s only one way remaining to “thin the herd” and maintain power for the Elites: Global War which will be the existential outcome for all.”

Now I’m thinking pandemic.or some deep sizemic vibrations to cause earthquake. a biological event could pass so fast on the earth it would ne another black plague… a global war would do it but would also render the earth uninhabitable. While we are already on the road to be extinct there are those that think they can maneuver around the end times scenario. Where I get a chuckle is almost all of them buy modern equipment to survive lol lol . I have some acquaintances that have been contestants on the tv show naked and afraid.. we’ve discussed the end times I believe the show is a social experiment to see if humans can overcome a cataclysmic life altering event. Similar to the discovery channel show the colony where the placed ten random people from various backgrounds in a shelled out city scape to see if they could rebuild from the ashes.

George, your conclusion as to the final outcome of the massive J shaped curves in population and technology is correct but not the only solution. You failed to consider the possibility of a pandemic (natural or Mann caused).

n_____ on August 29, 2019 at 13:03

Time to downsize, G____. Less is more, more or less. Ten computers is too many, unless you have given each of them a cutesy nickname, and Zeus rotates napping next to them and playing with the pointing devices. Kindle is actually a step in the right direction. Don’t throw out tools. You can get too Zen.

EcuadorExpat on August 29, 2019 at 12:11

Consider China is now testing proof of concept on how to play the algorithms with the media to insure they can bring the western world down with just info. Don’t underestimate China’s Ability for long range planning. Their belt and road will create more consumers than they would lose from the USA. Last I heard only 18% of China’s exports go to the USA.

Years ago one of the environmental groups had a study done and determined that for every American living a typical lifestyle, 90 other humans would be required to live a subsistence existence during their short(ened) lifespan. So be proud, George, you are only doing your part as an American. You didn’t think the 9 million plus refugees in camps around the world was caused just by American military imperialism, did you? Consider the millions living in favelas an slums around the world to be economic refugees as well.

And my gerontologist certified retired nurse wife often points out, the number one shortcoming of American retirees today is the inability to downsize. Eventually their attempt to maintain their pre-retirement lifestyle overwhelms them, they have an injury or illness, and then before they fully recover attempt to make up for the lost maintenance and care of their stuff and slide even farther. It makes for a great estate sale, though, with all their crap going for pennies on the dollar.

George, excellent piece today. -I hear ya, but, don’t give up. I grew up in the blinding smog and asthma of The Valley. Auto emission regulations greatly cleaned it up. -Capitalism is a wild and untamed thing, true, and it won out. It isn’t inherently or necessarily bad — rather it just needs to be adequately regulated. -Once we can focus on defining ‘adequate’ for our current circumstances, and lose the labels and divisive branding that separates us, things can improve without Armageddon having to thin and decimate the herd. -We make our stand here. We’re all in this lifeboat together. Best, Mike.

Jim in MO. AD0YQ on August 29, 2019 at 10:21

I have heard in several places we are in the so-called quickening times. No Sh!& Sherlock. All we can do is the best we can and believe it’s enough. Spend less actually, NO time worrying about what the fools, lowlifes and supposed leaders are doing and more time doing what we truly believe is right.

“Well, there ain’t no time to wonder why. Whoopee! we’re all gonna die.” Country Joe and the Fish at Woodstock.

73

Looking out of the box on August 29, 2019 at 13:45

I believe in pay it forward…. Karma If you look you can see theres so many that could use a listening ear or a simple hand up. When I can I do.. I can only think of two that used my good nature. When you see the tear of gratitude you know you did right… or someone you had helped years ago spot you in Walmart walk up no words spoken and gives you a bear hug.. you did right..

Patrick D on August 29, 2019 at 19:46

Hey Jim in MO Had dinner with Joe at a small restaurant in Vancouver , Canada in, if I remember correctly, 1968 and went to his act at a club called the Retinal Circus that evening, real sweetheart Dude. Have not met many really nice people in My lifetime, but He was definitely one of them. What do I know??? Loved that line in that song, Come to think of it I saw Him a couple of years later about 2:00 am in the morning at an outdoor festival with Rod Stewart coming on afterward, fun times. Great memories I’d forgotten thanks Man. Cia for now

My personal feeling is that the world is at it’s zenith both in terms of population and economics of scale. The future may look back at what we thought was to be endless growth and wonder how we could not see the huge fall to come.

ZBeeblebrox on August 29, 2019 at 09:17

No Worries Mate ! Ure Alien Overlords not quite ready for Harvest.. just waiting for a Harvest Moon..

Besides Ford Perfect should be along soonly, to rescue those that make it thru..